Karachi Chamber of Commerce and Industry concerned over targeting of Karachi-based taxpayers for audit

Karachi, October 10, 2014 (PPI-OT): President of the Karachi Chamber of Commerce and Industry (KCCI), Iftikhar Ahmed Vohra, while expressing deep concerns over selection of 77,500 taxpayers for audit through computer balloting, has asked Federal Board of Revenue (FBR) to provide details of total number of Karachi based taxpayers (Sales Tax and Income Tax) selected for audit in order to fully evaluate the impact of such audit.

In a communique issued to Chairman FBR Tariq Bajwa, President KCCI further sought details of total amount and percentage of Income Tax, Sales Tax and FED recovered from Karachi based taxpayers in the financial year 2013-14.

President KCCI further urged FBR Chairman to hold any further action such as issuance of audit notices or initiation of audit proceedings, until the issue is resolved in consultation with KCCI and other chambers of commerce as well as relevant trade bodies.

Iftikhar Vohra was of the view that FBR is taking the easy way out to enhance revenues by squeezing the same set of taxpayers who are already paying their taxes on regular basis, instead of making intensive efforts for broadening tax base by identifying new taxpayers and getting them into the tax net.

“KCCI takes exception to the arbitrary decision by the FBR to increase the percentage of the number of cases selected for audit to 15 percent”, he added.

He said that FBR is avoiding the more challenging task of laying its hands on those who are leading the lifestyles well beyond their declared income and assets. Despite claiming many times that the FBR has compiled the list of more than 700,000 individuals who have a lavish living standard and assets worth millions but are not paying any taxes, the FBR has neither published the list nor taken measures to register these individuals for recovery of Income Tax and Wealth Tax.

Iftikhar Vohra feared that majority of taxpayers selected for audit might be Karachi based who will bear the brunt of audit notices, harassment and extortion by field officers.

Karachi based taxpayers were contributing nearly 65 percent of total tax revenue of Pakistan, and do not have the capacity to further increase the quantum of Income Tax and Sales Tax due to adverse conditions and unfavorable business environment in Karachi, he added.

He further noted that despite contributing a major percentage of total tax revenue, very little is spent on restoration and development of Karachi’s crumbling infrastructure, security and provision of utilities to the large number of industries and businesses located in the mega city.

Iftikhar Vohra pointed out that unfortunately, all discretionary powers, laws and rules in most cases are used to harass and intimidate the taxpayers based in Karachi, whereas the FBR and its regional offices were not exercising such powers in other parts of the country.

It would be appropriate for FBR to publicize the relevant data and collection figures for each region to correct this perception, he stressed, adding that KCCI will not accept any discriminatory and arbitrary increase in number of cases selected for audit in respect of Karachi based registered persons.

He said that trade bodies and representatives of taxpayers should have been taken on board before taking such harsh measures. FBR neither has the capacity nor the sufficient field force to conduct such huge number of audits. The exercise will therefore be counter-productive and result in resentment and litigation by the taxpayers causing waste of time, loss of tax revenue and discourage new taxpayers.